Utah lawmakers pass controversial bill on noncompete contracts
Tom Smart, Deseret News
SALT LAKE CITY — State lawmakers late Wednesday passed another reworked version of a controversial bill to regulate the use of noncompete employment contracts in Utah.
Like the eighth substitute of HB251, the 10th substitute does not ban noncompete contracts but restricts an employer or employee from entering into one lasting more than one year.
In addition, if a company seeks to enforce the restrictive covenants in court or arbitration and loses, it would have to pay court costs, attorneys fees and damages. The bill would only apply to businesses with 20 or more employees.
The Senate amended the bill to make clear that noncompete contracts do not include confidentiality and nonsolicitation agreements. It also does not prohibit "reasonable" severance agreements. It passed 22-6 in the Senate.
Sen. Todd Weiler, R-Woods Cross, called it a workable policy.
"I don't think this is going to turn over the apple cart for a lot of businesses," he said.
Sen. Lincoln Fillmore, R-South Jordan, said the bill is a one-size-fits-all approach. What works for a sandwich maker might not work for a computer programmer or company executive, he said. The bill, he said, leaves a lot of unanswered questions.
The House voted 71-2 to agree with Senate changes.
Bill sponsor Rep. Mike Schultz, R-Hooper, said the bill started dialogue on noncompete agreements that will continue over the summer.
"This isn't over," he said.